Part 2 Auditor Legal Defense and Types of Third Parties (20 points) I. As discussed in class, discuss the auditor's defe

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Part 2 Auditor Legal Defense And Types Of Third Parties 20 Points I As Discussed In Class Discuss The Auditor S Defe 1 (43.5 KiB) Viewed 71 times

Part 2 Auditor Legal Defense and Types of Third Parties (20 points) I. As discussed in class, discuss the auditor's defense for "Lack of Duty" if a third party sues the auditor. II. Identify types of third parties on. In class we noted that there are different types of third parties. Classify the independent situations shown below as either (a) Primary beneficiary (Identified User; Near Privity); (b) Foreseen; or (c) Foreseeable (reasonably foreseeable). 1. A potential purchaser of a business who asks for audited financial statements of that business and is known to the auditor 2. A potential purchaser of a business who asks for audited financial statements of that business and is NOT known to the auditor. However, the auditor knows that his or her client has asked for an audit because of an intention to sell the business. 3. The company borrowed money from Bank ABC. The auditor had been led to believe that the client would use the financial statements only to facilitate sale of the company. Bank ABC is what type of third party? 4. A vendor who sold inventory to a company. Answers: Type of third Party Use letters! 1. 3. 2. B. III Choose the best letter to classify the "Type of audit defense Shown below: A. Lack of duty: Client lawsuit Nonnegligent performance: client or third-party lawsuit Absence of a causal connection: Client lawsuit D. Absence of a causal connection: Third-party lawsuit Auditor Defense Letter (A, B, C, or * No implied or express contract The audit was performed in accordance with auditing standards נס or